Aug. 9 (Bloomberg) -- Federal Reserve policy makers are
likely to embark on a third round of large-scale asset
purchases, moving “more decisively” to secure the U.S.
recovery, said Harvard University economist Kenneth Rogoff.

“They certainly should do something right away,” said
Rogoff, a former International Monetary Fund chief economist who
attended graduate school with Fed Chairman Ben S. Bernanke. It’s
“hard to know” if Bernanke would immediately be able to gain
the support of Federal Open Market Committee members, Rogoff
said in an interview today on Bloomberg Television.

The FOMC meets today in Washington a day after the worst
day for U.S. stocks since December 2008. Bernanke last month
outlined policy options including additional asset purchases or
strengthening the commitment to low interest rates after the
first two rounds of so-called quantitative easing failed to keep
the unemployment rate below 9 percent.

“Out-of-the-box policies are called for, especially much
more aggressive monetary policy, however unpopular that may
be,” said Rogoff, 58, a former Fed economist who like Bernanke
earned a Ph.D. from the Massachusetts Institute of Technology.
The Fed is “going to move more decisively,” Rogoff said.

The Fed is scheduled to release a statement at about 2:15
p.m. New York time after its meeting. Bernanke and his
colleagues may prolong a pledge to maintain record monetary
stimulus, said economists at JPMorgan Chase & Co., BNP Paribas
and Goldman Sachs Group Inc. The Fed could do so by making a
commitment to hold its $2.87 trillion balance sheet steady for
an “extended period.” The central bank has kept its benchmark
rate near zero since 2008.

The Fed should also avoid repeating that officials are
trying to boost stocks, Rogoff said, calling that a “bad
idea.”

The Standard & Poor’s 500 Index tumbled 6.7 percent
yesterday to 1,119.46 in New York trading, its biggest decline
since December 2008. The benchmark Stoxx Europe 600 Index
dropped 4.1 percent yesterday in London to 228.98, its biggest
retreat since March 2009.

The Fed should have extended its asset-purchase program,
“as controversial as it was,” instead of ending it, Rogoff
said. The central bank completed the second round of bond buying
in June, purchasing $600 billion of Treasuries.

“They need to move much more decisively,” Rogoff said.

Carmen Reinhart and Rogoff wrote a 2009 book on the history
of financial crises, “This Time Is Different,” a work Bernanke
said in April was “very informative.”